Income Tax Ordinance [New Version]

In this Section –

"double taxation relief" – any credit in respect of income tax outside Israel that has been allowed for income tax purposes under this Ordinance, including any credit or relief taken into account in determining the net Israeli rate imposed on dividends received;

"rate of relief" – the rate that is the excess of the rate of tax deducted from the dividend over the net Israeli rate.

Where the tax paid by a company is affected by double taxation relief, the amount to be set off under section 163 or refunded under section 160 in respect of the tax deducted by the company from a dividend it paid shall be reduced – in accordance with the following rules – and these are the rules:

For the purposes of section 212 –

In this Chapter –

"international agreement" – an agreement in respect of which an Order has been made under section 196, as well as an information exchange agreement;

"information exchange agreement" – an agreement between the State of Israel and a foreign state concerning the provision of assistance, including by means of exchange of information, for the purpose of enforcing the tax laws of the State of Israel or the tax laws of the foreign state;

"tax law" – legislation dealing with the imposition of a tax or a compulsory payment the implementation of which the Minister of Finance is charged with;

"state" – as defined in section 196(c).

Where an information exchange agreement has been concluded, the Minister of Finance shall publish a notice thereof in Reshumot (Official Gazette).

A person who has committed an offence against this Ordinance or against a regulation made thereunder, and no other express penalty has been prescribed for that offence, is liable to one year's imprisonment or a fine as referred to in section 61(a)(2) of the Penal Law, 5737-1977 (in this Part – the Penal Law), or both penalties.

A person who has failed to give notice of a shelf plan as referred to in section 131d(f) is liable to one year's imprisonment or the fine prescribed in section 61(a)(2) of the Penal Law.

A person who, without sufficient cause, has committed one of the offences listed below is liable to one year's imprisonment or a fine as referred to in section 61(a)(2) of the Penal Law, or both penalties:

A person who contravenes a provision of section 236 is liable to one year's imprisonment or a fine as referred to in section 61(a)(4) of the Penal Law, 5737-1977, or both penalties.

A person who, without reasonable justification, made an incorrect return, by omitting any income in respect of which he or she is required under the Ordinance to submit a return, or by understating it, or a person who furnished incorrect information in relation to any matter or thing affecting his or her liability to tax or the liability of another person or of a partnership, is liable to two years' imprisonment or a fine as referred to in section 61(a)(3) of the Penal Law and the amount of the deficiency in the income determined on account of those incorrect return or information or that would have been determined had the return or information been accepted as correct, or both penalties; the burden of proof lies on one who claims to have had reasonable justification.

A person who has failed to deduct tax that was required to be deducted by him or her under sections 161, 164 or 170, as well as a person who received employment income or income under section 2(5) knowing that tax had not been deducted therefrom pursuant to those sections, is liable to one year's imprisonment or a fine as referred to in section 61(a)(2) of the Penal Law and twice the total of all amounts not deducted, or both penalties.

Where tax has been deducted pursuant to sections 161, 164 or 170, and without reasonable justification was not paid to the assessing officer as referred to in sections 161, 166 or 171, the person liable to deduct is liable to two years' imprisonment or a fine as referred to in section 61(a)(3) of the Penal Law and twice the total of all such deductions, or both penalties; the burden of proof lies on one who claims to have had reasonable justification.

A person who wilfully, with intent to evade tax or to assist another person to evade tax, has committed one of the offences listed below, is liable to seven years' imprisonment or a fine as referred to in section 61(a)(4) of the Penal Law and twice the amount of the income he or she concealed, intended to conceal or assisted in concealing, or both penalties; and these are the offences:

For the purposes of a fine under this Part or Part 10, the basis of which is an amount of income, the basis shall be increased in accordance with the rate of increase of the consumer price index between the last index published before the end of the tax year to which that basis relates and the last index published before the imposition of the fine.

A body of persons shall not pay, directly or indirectly, a fine or composition money imposed on another in respect of an offence under sections 215 to 220; a person who contravenes a provision of this section is liable to a fine of three times the amount of the fine or composition money paid; for this purpose, "body of persons" – excludes a body of persons whose members are required to place their full labour at its disposal and to transfer their assets to it.

Where a person has committed an offence under sections 215–220, the Director may, with that person's consent, accept from him or her composition money not exceeding twice the highest fine that may be imposed for that offence, and if the Director has done so – all proceedings against that person in respect of that offence shall be discontinued, and if he or she was detained in respect of it – he or she shall be released.

A person charged with an offence of omitting income or of under-recording it under section 217 shall be deemed to have been prima facie proved guilty of the offence if any one of the following has been proved:

A person who assisted another in preparing a return, notice or other document for the purposes of this Ordinance, knowing that such return, notice or document contains incorrect information, or a person who appeared as the representative of a taxpayer and furnished information for the purposes of this Ordinance knowing it to be incorrect, shall, for the purposes of sections 215–217 and 220, be deemed to have done the things aforesaid.

Where a body of persons has committed an offence under sections 215–220, every person who, at the time of commission of the offence, was an active manager, partner, bookkeeper or responsible clerk, trustee or agent of that body shall also be deemed guilty of the offence, unless he proved one of the following two matters:

No criminal prosecution shall be brought under this Ordinance after six years from the tax year in which the offence was committed, and in the case of an offence against the provisions of section 220 — after ten years from the tax year in which the offence was committed.

The institution of proceedings for the imposition of a penalty, fine or imprisonment under the Ordinance, or the imposition thereof thereunder, does not exempt a person from the obligation to pay tax with which he has been charged or with which he may be charged.

The Minister of Police may authorise an assessing officer to conduct investigations or searches for the purpose of preventing offences against this Ordinance or for the purpose of detecting them, and an assessing officer so authorised shall be entitled —

The provisions of this Ordinance shall not affect any criminal proceeding under any other law.

The Director may publish once a year a list of all taxpayers who were convicted in the preceding year by a final judgment of an offence under section 220; such publication shall be made in at least two daily newspapers.